Named because of the blue haze produced by the scattering of the sun's rays striking dust particles and droplets of moisture in the atmosphere. The blue haze effect is magnified by droplets of oil produced by the eucalypt forest. This scientific phenomenon is called 'Rayleigh Scattering' after Lord Rayleigh who published, in 1871, his investigation into the scattering of light - he was the first person to explain why the sky is blue.
It's an amazing place, certainly different from any other mountainous area that I've been to (Grampians, Flinders Ranges, Tasmania etc). Usually, the flat land is at the base of the mountains, any townships are on low ground, and you look up at the mountains. Here the flat part with the houses is at the top, and rather than looking up at the mountains, you're looking down at cliffs and valleys. Usually: flat ground with mountains pushed up - here: flat ground with valleys washed away. I'm used to having to walk to get to the top, here you walk to the bottom.
I didn't realise how close the area is to Sydney - it's basically an outer suburb - resulting in way too many tourists. I really would have enjoyed the scenery here 200 years ago!